All posts by Steve Tinnelly

Assessment Lien Enforcement (Generally)

Payment of an owner’s delinquent assessment debt (including any applicable late fees, interest, collection costs, etc. lawfully imposed on the owner in connection therewith) becomes the personal obligation of the owner at the time the assessments and other sums are levied by the association. (Civ. Code § 5650(a); See also “Duty to Pay Assessments.”) Civil Code Section 5675 allows an association to secure this debt by recording an assessment lien against the owner’s lot or unit. After the expiration of thirty (30) days following the recording of an assessment lien, the assessment lien may be enforced “in any manner permitted by law,” including the following: (Civ. Code § 5700(a).)

*Limitations on Foreclosure
Prior to enforcing an assessment lien through nonjudicial or judicial foreclosure, the underlying assessment debt must meet or exceed the limitations contained in Civil Code Section 5720. (See “Limitations on Foreclosure of Assessment Lien.”)

“One Action Rule” & Assessment Liens
California’s “One Action Rule” generally requires the holder of a claim secured by real property (i.e., a mortgage lender) to take only one action against the debtor, and to pursue the real property first before suing the debtor personally. (See “One Action Rule.”) Although an association that records an assessment lien against an owner’s property also becomes the holder of a claim secured by real property, Civil Code Section 5700 allows the association to pursue the owner personally (i.e., to file a lawsuit against the owner) even after an assessment lien is recorded. (See “One Action Rule.”)

Judicial Enforcement & Merger Doctrine
When an assessment lien is enforced by an association through judicial action (i.e., a lawsuit for a money judgment or a judicial foreclosure action), the assessment lien is merged into any judgment obtained by the association. (Diamond Heights Village Assn., Inc. v. Financial Freedom (2011) 196 Cal.App.4th 290; See also “Money Judgments (Assessment Collection).”)

One Action Rule

California’s “One Action Rule” (aka “Single Action Rule”) is codified at Code of Civil Procedure Section 726. It generally requires the holder of a claim secured by real property (i.e., a mortgage lender) to take only one action against the debtor, whether it is to conduct a nonjudicial foreclosure action, judicial foreclosure action, or to sue the debtor personally for the balance of the debt. Section 726 has been interpreted by California Courts to require a mortgage lender to pursue the real property first before being able to sue the debtor personally. (Walker v. Community Bank (1974) 10 Cal.3d 729.) The One Action Rule is therefore also known as the “Security First Rule.”

Exemption for HOAs & Assessment Liens
An association that records an assessment lien against an owner’s property also becomes the holder of a claim secured by real property, similar to a mortgage lender. However, there is an express waiver of the One Action Rule in the Davis Stirling Act, found at Civil Code Section 5700(b). Section 5700(b) allows for an association to pursue the debtor (the delinquent owner) personally even if the association has recorded an assessment lien against the owner’s property as security for the owner’s assessment debt. This allows for an association to, for example, initiate a nonjudicial foreclosure action while also filing a lawsuit against the delinquent owner. However, the association will at some point have to select one remedy. For example, if the association obtains a money judgment, the assessment lien merges into the judgment and can no longer be enforced through nonjudicial foreclosure. (See Diamond Heights Village Assn. v. Financial Freedom (2011) 196 Cal.App.4th 290: See also “Money Judgments (Assessment Collection).” )

Diamond Heights Village Association, Inc. v. Financial Freedom Senior Funding Corp.

(2011) 196 Cal.App.4th 290

[Assessment Collection; Judgment Lien Merger] When a HOA assessment lien is enforced by the HOA through judicial action, the debt secured by the assessment lien is merged into the judgment.

Ragghianti Freitas, David F. Feingold and Rodrigo D. Dias for Plaintiff and Appellant and for Plaintiff and Respondent.
Steyer Lowenthal Boodrookas Alvarez & Smith, Jeffrey H. Lowenthal, Carlos A. Alvarez and Benjamin R. Ehrhart for Defendant and Appellant and for Defendant and Respondent.

OPINION

[294] SEPULVEDA, J.

Plaintiff Diamond Heights Village Association, Inc. (Association), sued the owners of a condominium unit for failing to pay assessments levied for maintenance of common areas. The Association also sued Financial Freedom Senior Funding Corporation (Financial Freedom), which holds a deed of trust on the unit securing a reverse mortgage loan. In its single cause of action against Financial Freedom, the Association sought foreclosure of assessment liens and priority over the deed of trust. Financial Freedom obtained a summary judgment in its favor. A bench trial against the unit owners on other causes of action was held, at which the court partially voided Financial Freedom’s deed of trust.

The Association appeals the summary judgment for Financial Freedom, and Financial Freedom appeals the judgment on the remaining claims voiding its property interest. Financial Freedom also appeals the court’s attorney fee orders.

We affirm summary judgment for Financial Freedom on the lien foreclosure cause of action and reverse the judgment on the remaining claims to the extent it voids Financial Freedom’s deed of trust. The trial court erred in voiding Financial Freedom’s security interest in the property when Financial Freedom had not been joined as a party on the claims being tried, and final judgment had already been entered in its favor. We affirm the court’s attorney fee orders.

I. FACTS

The Association maintains a 396-unit residential condominium complex in San Francisco known as Diamond Heights Village. Diamond Heights Village is governed by a first restated declaration of covenants, conditions, and restrictions (CC&R’s) recorded in 1990. Under the CC&R’s, homeowners agree to pay assessments levied by the Association for maintenance of Diamond Heights Village. (See Civ. Code, § 1366 [authorizing assessments].)

[295]

A. Assessment liens

Mark Williams owned a unit in Diamond Heights Village and failed to pay the assessments. The Association recorded notices of delinquent assessment in 1994 and 1995. To avoid collection efforts by the Association and other creditors, Williams filed five separate bankruptcy petitions from 1995 to 1999, each of which was dismissed. Several days after the fifth bankruptcy petition was dismissed, Williams conveyed the Diamond Heights Village condominium unit to himself and his mother, Lois Crosby, as joint tenants. In 2000 and 2001, the Association recorded assessment liens against the condominium unit. (Civ. Code, § 1367.)

B. Judgment on assessment liens

In 2002, the Association obtained a default judgment against Williams for foreclosure of the assessment liens. The total amount of the judgment, including attorney fees and costs, was $39,199.[[1]] The Association did not record an abstract of judgment. The court issued a writ of execution for the sale of the unit to satisfy the judgment. Crosby, now a joint tenant of the unit, filed a petition for bankruptcy to evade the Association’s collection efforts. A second writ of execution was issued and a foreclosure sale was set for 2004, after Crosby’s bankruptcy petition was dismissed, but Williams filed a sixth bankruptcy petition on the day set for the sale. That bankruptcy petition, like all the others, was dismissed. Several months later, Williams and Crosby embarked on another transaction affecting the condominium unit before a foreclosure sale was conducted.

C. New first deed of trust

In October 2004, Crosby applied for a reverse mortgage with defendant Financial Freedom, a subsidiary of IndyMac Bank. A homeowner must be 62 years of age or older to qualify for a reverse mortgage with Financial Freedom. Crosby, born in 1920, qualified. Crosby’s application stated that there was an outstanding judgment against her and listed the Association among those holding a lien on the property.

Financial Freedom ordered a preliminary title report that noted title ownership by Crosby and her son, Williams, as joint tenants. The preliminary title report did not list the Association’s assessment liens despite their [296] recordation with the county recorder’s office. The Association’s judgment had not been recorded and was not listed in the title report.[[2]]

In November 2004, Financial Freedom obtained certification from the Association concerning certain features of Diamond Heights Village, such as unit ownership in fee simple and the provision of property and liability insurance. The Association also certified that there was nothing in the CC&R’s “that would prevent the placing of a first mortgage lien on an individual unit or would jeopardize the first lien status of such a mortgage due to future association assessments.” (Italics added.) Financial Freedom’s certification form did not ask if there were unpaid past assessments.

Financial Freedom completed the transaction in December 2004, creating a new first mortgage. Williams transferred his one-half interest in the unit to his mother, Crosby, giving her full title to the unit. Crosby then executed a deed of trust in favor of Financial Freedom to secure a reverse mortgage loan. The two documents—Williams’s grant deed and Crosby’s deed of trust—were notarized by the same person on the same date, and recorded within seconds of each other. Williams did not receive any consideration from his mother for the transfer of his ownership interest in the unit. In funding the loan, Financial Freedom paid off first and second deeds of trust totaling $219,935. Financial Freedom also paid $48,948 in cash to Crosby. Financial Freedom funded the loan in an amount no less than $278,505.

D. Amended judgment on assessment liens

An amended judgment against Williams and Crosby for foreclosure of the Association’s assessment liens was entered in 2005. The amended judgment included interest and costs incurred from the time of the original 2002 judgment and totaled $51,184. The Association did not record an abstract of judgment for the amended judgment. The Association obtained a writ of execution for the sale of the unit, but Crosby filed another petition for bankruptcy. The petition was later dismissed. The judgment was last renewed in January 2008 for an updated amount of $64,854.

E. Complaint to set aside fraudulent transfer and to foreclose lien

The Association learned of Financial Freedom’s first deed of trust at some point and, in an effort to establish priority for its assessments over Financial Freedom’s deed of trust, filed the present action in December 2007. The [297] Association stated six causes of action: setting aside fraudulent transfer; conspiracy; breach of contract (CC&R’s); foreclosure of a lien; open book account; and injunctive relief. All of the causes of action were stated against Williams and Crosby but only the fourth cause of action for foreclosure of a lien was stated against Financial Freedom. The fourth cause of action also named judgment creditor Hassen & Associates as a defendant. In that cause of action, the Association alleged that homeowners Williams and Crosby owed assessments amounting to $67,149 as of December 2007 (plus assessments accruing after filing of the complaint). It was further alleged that the homeowners had not satisfied the 2000 and 2001 assessment liens, nor the 2002 judgment and that those liens and judgment “remain valid and encumber the property.” The Association alleged that Financial Freedom’s 2004 deed of trust is subordinate to the liens and judgment held by the Association. While seeking judicial foreclosure of the assessment liens, the Association also stated its intention to reserve its right to enforce the existing judgment foreclosing the same liens.

F. Answers and cross-complaint

Financial Freedom answered the complaint raising several affirmative defenses, including the statute of limitations. It also filed a cross-complaint for declaratory relief and other claims. Financial Freedom asserted that it has a valid first lien against the Diamond Heights Village condominium unit and that it is “a bona fide encumbrancer with respect to said lien.” It sought a judicial determination of the rights and interests of itself and the Association in the property. Judgment creditor Hassen & Associates also answered the complaint. Homeowners Williams and Crosby never answered the complaint and their default was entered in March 2008.

G. Summary judgment motion

In February 2009, Financial Freedom moved for summary judgment on the Association’s complaint, which stated a single cause of action against Financial Freedom for foreclosure of liens. Financial Freedom noted that the Association did not have a judgment lien and was basing its priority claim upon the assessment liens. Financial Freedom argued that the Association’s action for foreclosure of the assessment liens, and the claimed priority under them, failed because (1) foreclosure of the assessment liens had already been litigated, reduced to judgment, and merged into that judgment; (2) foreclosure of the assessment liens was time-barred; and (3) the CC&R’s expressly subordinated assessment liens to first mortgage holders like Financial Freedom.

[298] Judge Charlotte Woolard ruled on the motion on May 6, 2009, and granted summary judgment on the first ground. The court ruled that the Association’s assessment liens merged into the judgment in the earlier foreclosure action against the homeowners, that the judgment was unrecorded, and that Financial Freedom’s recorded deed of trust thus had priority.

H. Judgment for Financial Freedom

Financial Freedom requested dismissal of its cross-complaint and sought entry of judgment in its favor. In June 2009, Judge Woolard entered a judgment in favor of Financial Freedom and against the Association decreeing that the Association “shall recover nothing, and shall obtain no relief, as against defendant Financial Freedom, in this action.” The court denied Financial Freedom’s motion for contractual attorney fees under the CC&R’s because there was “no privity” between Financial Freedom and the Association. (Civ. Code, § 1717.)

I. Trial of remaining claims

The Association’s remaining claims against homeowners Williams and Crosby and judgment creditor Hassen & Associates were tried before Judge Nancy Davis on May 26, 2009, a few weeks after Judge Woolard had granted summary judgment to Financial Freedom. The Association contended that Judge Woolard’s summary judgment ruling in Financial Freedom’s favor did not preclude Judge Davis from setting aside the alleged fraudulent conveyance and determining Financial Freedom’s security interest as a result of setting aside that conveyance. The court agreed and proceeded to resolve issues affecting Financial Freedom despite a dispositive ruling in Financial Freedom’s favor on the only cause of action against it and its absence from trial on the remaining claims. The only defendant appearing at trial was judgment creditor Hassen & Associates.

The court issued a statement of decision in August 2009. The court found that “the transfer from Williams to Crosby was fraudulent and must be set aside to the extent necessary to satisfy the Association’s claim” for assessments. The court noted that, “[a]t the time of the transfer, Williams and Crosby owned the Unit as Joint tenants, each owning an undivided one-half interest. As the transfer is set aside, the result is that Williams and Crosby remain joint tenants and were joint tenants at the time the deed of trust was granted to Financial Freedom by Crosby.” Crosby “could encumber her own one half interest, but could not encumber the one half interest in the Unit owned by Williams who, at the time, was a judgment debtor of the Association.” The court ruled that the deed of trust “conveyed by Crosby to Financial [299] Freedom is void to the extent [the deed] purported to encumber Williams’s one half interest” in the condominium unit.

The court’s statement of decision acknowledges that a fraudulent transfer is not voidable against “a person who took in good faith and for a reasonably equivalent value.” (Civ. Code, § 3439.08, subd. (a).) The court ruled that Financial Freedom was not a bona fide encumbrancer entitled to the protection of this statute because Financial Freedom “actively participated in the transfer from Williams to Crosby” and performed an inadequate title review that failed to discover the recorded assessment liens. The court also suggested that Financial Freedom forfeited any claim to bona fide encumbrancer status by dismissing its cross-complaint for declaratory relief and choosing not to appear at trial.

J. Judgment for the Association

The court entered a judgment in August 2009 ordering the Diamond Heights Village condominium unit sold and declaring the rights of the Association, homeowners, Financial Freedom, and judgment creditor Hassen & Associates to the proceeds of the sale. The court declared Hassen & Associates to have senior position, with right of first payment. The court ordered the remaining funds held until any appeal was resolved and, thereafter, “divided between the Association and Financial Freedom in accordance with their one-half secured interest” in the unit. The court awarded the Association $89,562 for assessments through May 2009, payable from Williams’s one-half interest in the property. The court also awarded the Association attorney fees against the homeowners under the CC&R’s, later assessed at $82,086, to be paid from Williams’s property interest. Financial Freedom was left with just Crosby’s original one-half interest in the property to secure its mortgage loan and payments of at least $278,505. Sale proceeds from that one-half interest may be insufficient to pay the full amount owed to Financial Freedom.

In September 2009, Financial Freedom filed a motion to vacate the judgment. Financial Freedom argued that the court had no jurisdiction to enter a judgment affecting Financial Freedom’s deed of trust because (1) the prior summary judgment fully adjudicated the Association’s single cause of action against Financial Freedom, (2) the Association’s appeal of the summary judgment divested the court of jurisdiction before the court ruled on the remaining claims affecting Financial Freedom’s interest, and (3) Financial [300] Freedom was not a defendant on the Association’s remaining claims and not a party to the trial. The court denied the motion in February 2010.

K. The appeals

We are presented with three related appeals, which we have consolidated for purposes of briefing, argument, and decision. On the summary judgment in Financial Freedom’s favor on the foreclosure cause of action: the Association appeals the judgment and Financial Freedom separately appeals the post judgment order denying it attorney fees. On the judgment following trial in the Association’s favor on the cause of action for fraudulent conveyance and all other remaining claims: Financial Freedom appeals both the judgment (and order denying its motion to vacate the judgment) and the post judgment order awarding the Association attorney fees.

II. DISCUSSION

A. Summary judgment was properly granted to Financial Freedom

As noted above, the Association recorded assessment liens against the Diamond Heights Village condominium unit in 2000 and 2001. (Civ. Code, § 1367.) In 2002, the Association obtained a default judgment against homeowner Williams for foreclosure of the assessment liens. The Association did not record an abstract of judgment. The court issued writs of execution for the sale of the unit to satisfy the judgment but the homeowners’ petitions for bankruptcy stayed proceedings and prevented levy. It was at this juncture that Williams conveyed his one-half interest in the property to his joint tenant and mother, Crosby, and she then mortgaged the entire property to Financial Freedom.

The Association then filed a new complaint in which it asserted a single cause of action against Financial Freedom for foreclosure of the Association’s assessment liens and sought priority over Financial Freedom’s deed of trust. Financial Freedom moved for summary judgment arguing, among other things, that the Association’s action for foreclosure of the assessment liens, and claimed priority under them, failed because foreclosure of the assessment liens had already been litigated, reduced to judgment, and merged into that judgment. Judge Woolard granted the motion. The court ruled that the Association’s assessment liens merged into the judgment from the earlier foreclosure action against the homeowners, the judgment was unrecorded, and Financial Freedom’s recorded deed of trust thus had priority.

(1) The court was correct. A condominium assessment becomes a debt of the owner when the assessment is levied by the condominium association. [301] (Civ. Code, § 1367.1, subd. (a).) “The debt is only a personal obligation of the owner, however, until the community association records a `notice of delinquent assessment’ against the owner’s interest in the development. Recording this notice creates a lien and gives the association a security interest in the lot or unit against which the assessment was imposed.” (Sproul & Rosenberry, Advising Cal. Common Interest Communities (Cont.Ed.Bar 2003) § 5.36, p. 328 [hereafter, Common Interest Communities]; see Civ. Code, § 1367, subd. (d).) The lien dates from the time the lien is properly recorded. (Thaler v. Household Finance Corp. (2000) 80 Cal.App.4th 1093, 1100-1102 .) “California follows the `first in time, first in right’ system of lien priorities.” (Id. at p. 1099.) Condominium assessment liens follow this same system. An assessment lien is “prior to all other liens recorded subsequent to the notice of assessment, except that the [CC&R’s] may provide for the subordination thereof to any other liens and encumbrances.”[[3]] (Civ. Code, § 1367, subd. (d).)

(2) It is generally understood that a lien is not a debt but acts as “security for payment of a debt or other obligation.” (4 Cal. Real Estate (3d ed. 2003) § 10:128, p. 395 (rel. 11/2003); see Civ. Code, § 2872.) The debt is the assessment, which is secured by the assessment lien. An assessment lien may be enforced “in any manner permitted by law,” including judicial foreclosure. (Civ. Code, § 1367, subd. (e).) When an assessment lien is enforced through judicial action, the debt secured by the lien is merged into the judgment. The doctrine of merger is an aspect of res judicata. (Passanisi v. Merit-McBride Realtors, Inc. (1987) 190 Cal.App.3d 1496, 1510.) “Under that aspect a claim presented and reduced to judgment merges with the judgment and is thereby superseded. [Citation.] The claimant’s remedy thereafter is to enforce the judgment; he may not reassert the claim.” (Ibid.)

“[W]hen a final judgment is entered, all causes of action arising from the same obligation are merged into the judgment and all alternative remedies to enforce that obligation extinguished by the judgment granting one of those remedies. [Citation.] The creditor cannot thereafter enforce the original obligation, because the judgment `”. . . creates a new debt or liability, distinct from the original claim or demand, and this new liability is not merely evidence of the creditor’s claim, but is thereafter the substance of the claim itself.”‘ ([Citation,] italics in original.) In other words, the . . . judgment extinguishes the contractual rights and remedies previously extant, [302] substituting in their place only such rights as attach to a judgment.” (O’Neil v. General Security Corp. (1992) 4 Cal.App.4th 587, 602.)

(3) Once a judgment is obtained, the judgment creditor may create a judgment lien by recording an abstract of judgment or may choose to levy execution, thereby creating an execution lien. (Code Civ. Proc., §§ 674, 697.710; Kahn v. Berman (1988) 198 Cal.App.3d 1499, 1507, fn. 7.) An execution lien does not arise when a writ of execution is issued by the court, but rather when the levying officer levies the property (constructively seizes it) by recording a copy of the writ of execution and notice of levy. (Code Civ. Proc., §§ 697.710, 700.010, 700.015, subd. (a); Kahn, supra, at p. 1508; see generally 8 Witkin, Cal. Procedure (5th ed. 2008) Enforcement of Judgment, § 99, p. 143.) The record here does not show that a levy ever occurred to create an execution lien, and the Association makes no claim to having an execution lien. The Association relies exclusively upon its assessment liens, despite having already foreclosed those liens in a 2002 judgment. The claim is unavailing. Those liens were foreclosed and the debts they secured were merged into the judgment. The Association’s remedy was to record the judgment, in which case the judgment lien would have given the Association priority over Financial Freedom. (Code Civ. Proc., § 697.310 et seq.)

(4) The Association seems to argue that an assessment lien lasts forever, even if foreclosed in a prior proceeding. This is incorrect. A lien is not a debt but acts as “security for payment of a debt or other obligation.” (4 Cal. Real Estate, supra, § 10:128, p. 395 (rel. 11/2003).) All liens are “extinguished by the lapse of time” if an enforcement action is not timely pursued on the principal obligation.[[4]] (Civ. Code, § 2911, subd. 1.) Where an action is timely pursued, the debt secured by the lien merges into the judgment. The judgment then becomes the debt. The judgment is enforceable for a period of 10 years, and longer if renewed. (Code Civ. Proc., §§ 683.020, 683.120, subd. (b).) (5) The Association has an enforceable judgment. It does not, however, have a lien on the property because the assessment liens and underlying debts merged into the judgment and the judgment was not recorded.

The Association argues that application of the merger doctrine under these circumstances creates the anomalous situation of a condominium association losing priority the moment a judgment is entered on an assessment. The Association argues that assessment liens should work like real estate attachment liens imposed during litigation. Where an attachment lien is in effect, a [303] judgment lien created on the same property relates back to the date the attachment lien was created and preserves the judgment creditor’s original priority. (Code Civ. Proc., § 697.020, subd. (b).) But a judgment itself does not relate back to the date of the attachment liens—it is the judgment lien that does so. Here, there is no judgment lien. The Association, therefore, has an unsecured judgment and may pursue enforcement against the homeowners. The Association may not, however, relitigate foreclosure of its assessment liens in an effort to achieve priority over Financial Freedom’s deed of trust.

The Association maintains that it is not really relitigating the assessments but, instead, the fraudulent conveyance that gave Financial Freedom a deed of trust. But Financial Freedom was not named as a defendant in the fraudulent conveyance cause of action. Financial Freedom was named as a defendant in a single cause of action for judicial foreclosure of the assessment liens. In that cause of action, the Association sought recovery against the homeowners for past assessments and alleged that the 2000 and 2001 liens encumber the property to secure the assessments. Those allegations were asserted, and adjudicated, in prior litigation. They may not be relitigated now. The trial court properly granted summary judgment to Financial Freedom on the Association’s cause of action to foreclose the previously litigated assessments liens.

B. The trial court erred in rendering a judgment on remaining claims that impaired Financial Freedom’s interests

The trial court granted defendant Financial Freedom summary judgment on the only cause of action stated against it. The order was filed on May 6, 2009. Financial Freedom then dismissed its cross-complaint, and Judge Woolard entered judgment for Financial Freedom on June 3, 2009. The judgment decreed that the Association “shall recover nothing, and shall obtain no relief, as against defendant Financial Freedom, in this action.”

Trial of the Association’s remaining claims against other defendants commenced before Judge Davis on May 26, 2009, and judgment was entered on August 17, 2009. Trial of those remaining claims was proper, including trial of the Association’s cause of action against the homeowners for fraudulent conveyance of their condominium unit. It was not proper, however, to void Financial Freedom’s security interest in the property (in whole or part) when Financial Freedom had not been joined as a party to the fraudulent conveyance cause of action, and final judgment had already been entered in its favor.

The Association brought its first cause of action to set aside a fraudulent transfer of real property against homeowners Williams and Crosby. A transfer is fraudulent if the debtor made the transfer “[w]ith actual intent to hinder, [304] delay, or defraud any creditor of the debtor,” “[w]ithout receiving a reasonably equivalent value in exchange for the transfer,” and with the intent to incur debts beyond the debtor’s ability to pay. (Civ. Code, § 3439.04, subd. (a)(1), (2).) Here, the Association alleged that Williams fraudulently conveyed his one-half interest to Crosby for no consideration in order to evade his debt to the Association, and that the transfer left Williams insolvent. The Association further alleged that Crosby was complicit in the fraudulent scheme. Crosby, once she obtained full ownership of the property, took out a reverse mortgage loan and made Financial Freedom the beneficiary of a deed of trust securing the loan. The Association did not allege that Financial Freedom participated in the homeowners’ fraudulent scheme. In fact, the Association did not name Financial Freedom as a defendant in its action to set aside the alleged fraudulent conveyance. Nor did the Association name the trustee of the deed of trust, Alliance Title Company. The Association’s position, adopted by Judge Davis, was that the court could void Financial Freedom’s security interest in the conveyed property despite Financial Freedom’s nonjoinder. This was error.

(6) The Association was free to exclude Financial Freedom from the fraudulent conveyance cause of action if it sought only a personal judgment against Williams and Crosby. But if the Association wanted to void Financial Freedom’s interest in the property, it should have joined the deed beneficiary as a party. (Code Civ. Proc., § 379.) Transferees are necessary parties “in an action to declare a transfer void as fraudulent.” (Heffernan v. Bennett & Armour (1952) 110 Cal.App.2d 564, 586-587.) Williams transferred his one-half interest to Crosby, making her the principal transferee, but the transaction also included Crosby’s execution of a deed of trust benefitting Financial Freedom. The Association may not void the deed of trust without joining Financial Freedom as a party and giving it an opportunity to defend the transfer. Trust beneficiaries, like Financial Freedom, “are necessary parties to an action affecting the security of a deed of trust.” (Monterey S.P. Partnership v. W. L. Bangham, Inc. (1989) 49 Cal.3d 454, 461; accord, Sylvester v. Sylvester (Alaska 1986) 723 P.2d 1253, 1259-1260 [mortgagee a necessary party in fraudulent conveyance action to set aside mortgage].) A deed of trust is, in practical effect, a mortgage with a power of sale. (Monterey S.P. Partnership, supra, at p. 460.) A respected commentator on the law has noted that a mortgagee is not indispensable to a fraudulent conveyance action “if the conveyance is to be set aside subject to the mortgage, . . . [b]ut where the suit is to set aside a previously given mortgage as fraudulent, then the mortgagee is a proper party defendant.” (3A Moore, Moore’s Federal Practice (2d ed. 1996) ¶ 19.09[6], p. 19-191.) The Association argues that Financial Freedom’s absence from the trial is the fault of Financial Freedom itself because it dismissed its cross-complaint seeking a declaration of its interests. This is incorrect. [305] Financial Freedom was entitled to abandon its cross-complaint after obtaining summary judgment in its favor on the only cause of action stated against it in the complaint. It was the Association’s obligation, as plaintiff in the fraudulent conveyance cause of action, to name parties necessary to obtaining the relief it sought.

The judgment voiding Financial Freedom’s interest in the property is also defective in another respect. Judge Woolard granted Financial Freedom’s summary judgment motion on May 6, 2009, and entered judgment on June 3, 2009. Judge Davis did not enter judgment on the remaining claims until August 17, 2009, over two months after Financial Freedom obtained a judgment decreeing that the Association “shall recover nothing, and shall obtain no relief, as against defendant Financial Freedom, in this action.” Judge Davis’s judgment also came after the Association appealed Judge Woolard’s judgment in Financial Freedom’s favor. Despite that final decree, and its appeal, Judge Davis issued a judgment granting the Association relief against Financial Freedom. Judge Davis voided Financial Freedom’s deed of trust as to one-half of the property and gave the Association priority over Financial Freedom on that half. This, too, was error.

(7) Judge Woolard properly entered judgment for Financial Freedom in this multiple defendant action after adjudicating the single cause of action stated against it. (Nguyen v. Calhoun (2003) 105 Cal.App.4th 428, 437.) “A judgment is the final determination of the rights of the parties in an action or proceeding.” (Code Civ. Proc., § 577, italics added.) “It is elementary that where a tribunal has jurisdiction over the parties and the subject matter, the jurisdiction continues until a final judgment is entered. . . .” (Riley v. Superior Court (1957) 49 Cal.2d 305, 309, italics added.) The court lost jurisdiction over Financial Freedom once judgment was entered in its favor, and thus had no power to void its property interest in the condominium unit.

Therefore, we must reverse the judgment entered by Judge Davis and remand the case with directions to enter a judgment affecting the rights only of those defendants properly before it: homeowners Williams and Crosby and judgment creditor Hassen & Associates. The judgment shall not invalidate any part of Financial Freedom’s deed of trust or otherwise impair its interests in the property.

C. The trial court was correct in ruling that Financial Freedom is not entitled to attorney fees

(8) Attorney fees incurred to enforce a contract are recoverable by the party prevailing on the contract if the contract specifically provides for such [306] recovery. (Civ. Code, § 1717.) The Diamond Heights Village CC&R’s contain several attorney fee provisions. The CC&R’s state that the Association may maintain a lawsuit against a unit owner for delinquent assessments, and that any judgment against the owner shall include an award of reasonable attorney fees. The Association is also entitled to attorney fees, according to the CC&R’s, in a court action to foreclose assessment liens. The CC&R’s also contain a general attorney fee provision, which states that the Association, or any owner, has the right to enforce the CC&R’s and is entitled to recover attorney fees in such an action.

The Association, in its foreclosure cause of action against the homeowners, Financial Freedom, and judgment creditor Hassen & Associates, included in its complaint a plea for an award of contractual attorney fees against the homeowners. The Association did not request attorney fees against Financial Freedom. Nevertheless, Financial Freedom filed a motion for contractual attorney fees after obtaining summary judgment in its favor. The court denied the motion, and Financial Freedom challenges that denial on appeal. The trial court was correct.

Civil Code section 1717, subdivision (a) provides in pertinent part that “[i]n any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.”

(9) Civil Code “[s]ection 1717 was enacted to establish mutuality of remedy where [a] contractual provision makes recovery of attorney’s fees available for only one party [citations], and to prevent oppressive use of one-sided attorney’s fees provisions.” (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 128.) In this case, for example, the attorney fee provision in the CC&R’s entitling the Association to attorney fees if it prevailed in an action against a condominium unit owner would reciprocally entitle the owner to fees should he or she prevail.

Civil Code section 1717 is also interpreted “to further provide a reciprocal remedy for a nonsignatory defendant, sued on a contract as if he were a party to it, when a plaintiff would clearly be entitled to attorney’s fees should he prevail in enforcing the contractual obligation against the defendant.” (Reynolds Metals Co. v. Alperson, supra, 25 Cal.3d at p. 128.) Thus, a [307] defendant who did not sign the contract containing the fee provision was held to be entitled to attorney fees where the defendant was unsuccessfully sued as an alleged coventurer bound by the contract. (Ibid.) Had the plaintiff in that case prevailed on its claim, the defendant would have had to pay the plaintiff’s attorney fees. (Ibid.) The court reasoned that the defendant therefore had a reciprocal right to fees when she prevailed. (Id. at p. 129.)

These principles do not aid Financial Freedom because the Association did not sue Financial Freedom under the CC&R’s, never sought fees against Financial Freedom under the CC&R’s, and was not entitled to fees against Financial Freedom had the Association prevailed. Civil Code section 1717 covers signatories to a contract containing a fee provision and those who are sued as alleged parties to the contract or otherwise alleged to be bound by its terms. The Association never alleged that Financial Freedom was bound by the CC&R’s. The Association included Financial Freedom in the cause of action for judicial foreclosure of liens because Financial Freedom claimed a senior lien that the Association disputed. The action between the Association and Financial Freedom rested upon a legal question as to lien priority, not contractual enforcement of the CC&R’s.

Financial Freedom argues that it is nevertheless entitled to fees because “as a practical matter” Financial Freedom, and not the legally liable homeowners, would have had to bear the cost of the fees if the Association prevailed against the owners. Financial Freedom reasons as follows: if the Association prevailed on its judicial foreclosure claim and assertion of lien priority, the Association would have been entitled to fees against the homeowners under the CC&R’s. Those fees, as a debt of the homeowners, would have been paid to the Association from the sale proceeds before Financial Freedom, as a junior lienholder on half the property, received any proceeds (or Financial Freedom would have to pay the Association’s secured debt and fees to protect Financial Freedom’s property interest and avoid foreclosure of the property). Financial Freedom argues that this collateral economic consequence of a foreclosure action entitles it to fees.

Financial Freedom’s argument relies upon Saucedo v. Mercury Sav. & Loan Assn.(1980) 111 Cal.App.3d 309 (Saucedo). In Saucedo, home buyers took the property subject to an existing loan secured by a deed of trust. (Id. at p. 311.) The deed holder refused to allow the purchasers to assume the loan without paying a transfer fee and increased interest, and threatened to enforce a due-on-sale clause requiring full payment of the loan. (Ibid.) The purchasers filed a successful suit to enjoin the deed holder from [308] enforcing the due-on-sale clause, and the court held that they were entitled to attorney fees. (Id. at pp. 312, 315.) The court found that the purchasers would not have been liable for fees had the deed holder prevailed because the loan note was between the deed holder and prior owner but also found that “as a . . . practical matter” the purchasers would have to pay off the secured debt, including attorney fees, if they wanted to prevent foreclosure and retain their home. (Id. at p. 315.) The court concluded that “[t]his practical `liability’ of the nonassuming grantee [purchaser] is sufficient to call into play the remedial reciprocity established by Civil Code section 1717.” (Ibid.) Since the purchasers would, “as a real and practical matter” be required to pay attorney fees incurred by the deed holder to prevent foreclosure, the purchasers were entitled to recover attorney fees when they prevailed in a declaratory relief action that forestalled foreclosure. (Ibid.)

There are distinguishing points between Saucedo and this case. A central point of distinction is that the purchasers who recovered fees in Saucedo were the successors in interest to the property subject to the promissory note containing the disputed due-on-sale clause and fee provision. (See Leach v. Home Savings & Loan Assn. (1986) 185 Cal.App.3d 1295, 1304-1306 [distinguishing and limiting Saucedo].) Here, the Association and Financial Freedom are complete strangers to each other, and the dispute rests upon the priority of competing security interests established by separate documents (an assessment lien and a deed of trust). The case resembles Clar v. Cacciola (1987) 193 Cal.App.3d 1032, 1037-1039 more than it resembles Saucedo, supra, 111 Cal.App.3d at page 315. In Clar, this District Court of Appeal refused to extend the reciprocal attorney fee provision of Civil Code section 1717 where the parties advanced competing claims on the priority of two deeds of trust. (Clar, supra, at pp. 1038-1039.) The prevailing defendants in Clar claimed a right to recover attorney fees because, had they lost, the plaintiffs’ attorney fees would have been added to the secured debt under the terms of the deed of trust, which the defendants would have had to pay “to prevent foreclosure and protect their equity in the property.” (Id. at p. 1037.) The court held that the defendants’ potential obligation to pay fees was too speculative. (Id. at pp. 1037-1038.)

(10) Likewise, Financial Freedom’s claim for attorney fees stretches Civil Code section 1717 too far. The statute is meant to prevent “oppressive use of one-sided attorney’s fees provisions” (Reynolds Metals Co. v. Alperson, supra, 25 Cal.3d at p. 128), not to abolish the general rule that each party pay its own attorney fees. It is one thing to grant nonsignatories the right to attorney fees where they are sued as if they were contracting parties liable for fees or otherwise held to the terms of the contract, and quite another to grant nonsignatories the right to attorney fees where no legal liability for fees was ever asserted and only an attenuated economic impact is threatened. The “practical liability” approach advocated by Financial Freedom is fraught with [309] peril. As one commentator has noted, “[i]n practical liability . . . cases, courts must make very fact specific analyses about the prevailing party’s potential liability had [he or] she lost. Nearly identical factual circumstances could yield entirely different results. The danger with analyzing the prevailing party’s practical liability is subjectivity and lack of guidelines for the courts to follow.” (Miller, Attorneys’ Fees for Contractual Non-Signatories Under California Civil Code Section 1717: A Remedy in Search of a Rationale (1995) 32 San Diego L.Rev. 535, 578-579, fn. omitted.) We decline Financial Freedom’s invitation to embark on this course.

D. The Association was entitled to attorney fees against the homeowners

As noted earlier, claims against the remaining defendants were tried after defendant Financial Freedom obtained summary judgment. Following that trial, the court awarded the Association, as the prevailing party, attorney fees against defendant homeowners Williams and Crosby under the CC&R’s and a statute authorizing fee recovery in a condominium association’s action to collect delinquent assessments. (Civ. Code, §§ 1717, 1366, subd. (e)(1).) Financial Freedom does not deny the validity of these fee provisions but argues that fees should have been denied in this instance because “as a practical matter” Financial Freedom as a junior lienor on one-half of the foreclosed property, not the homeowners, will bear the economic impact of the fee award. We again note our reluctance to embrace the practical liability approach to Civil Code section 1717 but have no occasion to discuss it further here. We are reversing the judgment to the extent that it voided Financial Freedom’s senior lienor status on the property, and thus no adverse economic impact attends the court’s order awarding fees to the Association against the homeowners. Financial Freedom’s objection to the fee award is therefore moot.

III. DISPOSITION

The June 3, 2009 judgment in favor of Financial Freedom is affirmed. The August 17, 2009 judgment in favor of the Association is reversed to the extent that it voided, in whole or part, Financial Freedom’s deed of trust on the property. The case is remanded with directions to amend the judgment consistent with the views expressed in this opinion, and to permit Financial Freedom an opportunity to address the court concerning amendment at any hearing conducted on the matter.

The September 24, 2009 order denying Financial Freedom attorney fees against the Association is affirmed. The February 8, 2010 order granting the Association attorney fees against Williams and Crosby is affirmed.

[310] The parties shall bear their own costs and attorney fees incurred on these appeals.

Ruvolo, P. J., and Rivera, J., concurred.

 

[1] Monetary amounts are rounded to the nearest dollar in this opinion.

[2] The title report did list an abstract of judgment in favor of Hassen & Associates in the amount of $6,438 that was recorded in 1996. On appeal, it is undisputed that Hassen & Associates has a judgment lien superior to the secured interest of the Association and Financial Freedom.

[3] To ensure financeability of condominiums, most CC&R’s “provide that the association’s lien is subordinate to the lien of any first deed of trust” regardless of when recorded, and Financial Freedom argued as an alternative basis for summary judgment that the CC&R’s here are no exception. (Common Interest Communities, supra, § 5.46 p. 339, italics added; see generally 9 Miller & Starr, Cal. Real Estate (3d ed. 2001) §§ 25B:92, 25C:57, pp. 25B-181 to 25B-185, 25C-182 to 25C-183 (rel. 10/2007) [hereafter, Cal. Real Estate].) We resolve the summary judgment on the ground adopted by the trial court and thus do not reach that issue.

[4] As yet another alternative basis for summary judgment, Financial Freedom argued that the Association’s 2007 action to foreclose on the 2000 and 2001 liens was time-barred. (See Cause of Action to Enforce Condominium Assessment (1989) 20 Causes of Action 827, § 9, accessible on Westlaw, database updated Sept. 2010 [assessment liens subject to statute of limitations].) We need not reach that issue.

Notice of Default (NOD)

The nonjudicial foreclosure of an assessment lien must be conducted in accordance with the procedural requirements contained in Civil Code Sections 2924, 2924b, and 2924c applicable to the exercise of powers of sale in mortgages and deeds of trust. (Civ. Code § 5710(a).) One of those procedural requirements involves the recording of a Notice of Default in the office of the county recorder where the property encumbered by the assessment lien is situated (the “Subject Property”). (Civ. Code § 2924(a)(1).)

Contents of Notice of Default
The required contents of the Notice of Default generally include information identifying the address of the Subject Property, a statement that the owner of the Subject Property has breached his/her obligation to pay assessments to the association, and a statement of the association’s information and its election to sell the property via the nonjudicial foreclosure action. (Civ. Code § 2924(a)(1).) The Notice of Default must also begin with the statement required under Civil Code Section 2924c(b) which, in sum, informs the owner of the following facts:

  • The potential for the Subject Property to be sold without court action;
  • The owner’s right to halt the nonjudicial foreclosure action by paying the amounts owed; and
  • The potential for the owner to lose legal rights if he/she does not take prompt action. (See Civ. Code § 2924c(b).)

Service of Notice of Default
The association must serve the Notice of Default on the owner in accordance with the manner of service of summons in Article 3 (commencing with Section 415.10) of Chapter 4 of Title 5 of Part 2 of the Code of Civil Procedure. (Civ. Code § 5710(b).) This essentially mirrors the service requirements applicable to the filing of lawsuits. Additionally, within certain timeframes, a copy of the Notice of Default must be mailed to specified persons having a legal interest in the Subject Property or otherwise having a right to be provided with a copy of the Notice of Default. (Civ. Code §2924b(b)-(c).)

Board Decision to Initiate Foreclosure
Prior to recording the Notice of Default, the owner must be provided with notice of the board’s decision to initiate nonjudicial foreclosure. (Civ. Code § 5705(d); See also “Decision to Initiate Foreclosure.”)

Right of Redemption

Where an association enforces an assessment lien through foreclosure and sale of an owner’s property (whether through nonjudicial or judicial foreclosure), the purchaser of the property at the foreclosure sale (whether the purchaser is the association or a third-party) takes ownership of the property subject to the foreclosed owner’s “right of redemption.” The right of redemption allows for the foreclosed owner to “redeem” (reinstate his/her ownership of) the foreclosed property by paying a certain amount to the foreclosure trustee within the applicable redemption period.

Redemption Period
The redemption period varies depending upon whether the property is sold through nonjudicial foreclosure or through judicial foreclosure:

  • Nonjudicial Foreclosure: 90 Days – When an association enforces an assessment lien through nonjudicial foreclosure (aka “trustee sale”), the applicable redemption period is ninety (90) days. (Civ. Code § 5715(b); Code Civ. Pro § 729.035.)
  • Judicial Foreclosure: 3 Months or 1 Year – When an association enforces an assessment lien through judicial foreclosure, the applicable redemption period is three (3) months if the proceeds of the sale are sufficient to satisfy the association’s judgment amount, including the costs incurred in conducting the foreclosure sale.  (Code Civ. Pro § 729.030(a).) If the proceeds of the sale are insufficient to cover that amount, the redemption period is one (1) year. (Code Civ. Pro. § 729.030(b).)

Redemption Price
The price which must be paid by a foreclosed owner in order to exercise his/her right of redemption (the “redemption price”) is governed by Code of Civil Procedure Section 729.060. It generally includes the purchase price at the sale (where there are no third-party purchasers, and the property thus transfers to the association, the purchase price is typically the amount of the assessment lien plus the additional fees and costs incurred by the association in conducting the foreclosure sale).

Maintenance & Repairs During Redemption Period – In the event that the purchaser incurs expenses for maintenance and repair work on the property which were reasonably necessary for the preservation of the property, those maintenance and repair expenses may be incorporated into the redemption price. (Code Civ. Pro § 729.060(b); Barry v. OC Residential Properties (2011) 194 Cal.App.4th 861.)

Rents & Profits – During the redemption period and prior to the time when the property is redeemed, the purchaser at the foreclosure sale is entitled to receive from the person in possession of the property during the redemption period “the rents and profits from the property or the value of the use and occupation of the property.” (Code Civ. Pro. § 729.090.) Any such sums received by the purchaser must be offset against the other sums used in calculating the total redemption price. (Code Civ. Pro. § 729.060(c).)

Notice of Redemption Rights
When an assessment lien is enforced through nonjudicial foreclosure, the Notice of Sale that is recorded prior to conducting the foreclosure sale must include a statement that the owner’s property is being sold subject to the right of redemption. (Civ. Code § 5715.) Additionally, “promptly after the sale the levying officer or trustee who conducted the sale” must serve or mail a notice to the foreclosed owner of his/her right of redemption, including the applicable redemption period. (Code Civ. Pro. § 729.050.) This post-sale notice serves two (2) primary purposes:

“First, it ensures that the debtor is aware that the property may still be redeemed. Second, it informs the debtor the date on which his or her redemption rights expire. Presumably, a debtor who has not received such notice has been harmed or prejudiced by the fact that they were not informed of those rights.” (Multani v. Witkin & Neal (2013) 215 Cal.App.4th 1428, 1451.)

Where the post-sale notice is not provided, it may provide grounds for the foreclosed owner to set aside the foreclosure sale. (Multani.)

Possession During Redemption Period
The purchaser at the foreclosure sale does not technically own the property until the expiration of the redemption period.  The purchaser therefore does not have a legal right to possess the property during the redemption period (i.e., to evict the owner or a tenant from the property). However, the purchaser “is entitled to enter the property during reasonable hours to repair and maintain the premises and is entitled to an order restraining waste on the property. Such order may be granted with our without notice in the discretion of the court.” (Code Civ. Pro. § 729.090(c); Barry, at 868.)

Code of Civil Procedure Section 729.090. Rents & Profits During Redemption Period.

(a) From the time of the sale until a redemption, the purchaser is entitled to receive from the person in possession the rents and profits from the property or the value of the use and occupation of the property.

(b) Notwithstanding subdivision (a), the purchaser is liable to the person who redeems for any rents or profits that have been received by the purchaser pursuant to subdivision (a).

(c) The purchaser, from the time of sale until redemption, is entitled to enter the property during reasonable hours to repair and maintain the premises and is entitled to an order restraining waste on the property from the court. Such order may be granted with or without notice in the discretion of the court.

Barry v. OC Residential Properties

(2011) 194 Cal.App.4th 861

[Foreclosure; Redemption Price] When a property is sold through nonjudicial foreclosure of an assessment lien, the redemption price may include maintenance and repair expenses incurred by the purchaser during the redemption period that were reasonable necessary for the preservation of the property.

Law Offices of David A. Elwell and David A. Elwell for Plaintiff and Appellant.
Law Offices of Steven D. Silverstein and Steven D. Silverstein for Defendant and Respondent.

OPINION
RYLAARSDAM, Acting P. J.-

Plaintiff Shelby E. Barry filed a petition in the superior court to determine the redemption price for her unit in a common interest development that defendant OC Residential Properties, LLC had acquired at a nonjudicial foreclosure sale. (Civ. Code, § 1367.1, subd. (g); Code Civ. Proc., § 729.070, subd. (a).) The trial court ruled the amount due was $18,148.71, a sum that included over $17,900 in expenses defendant paid for maintenance and repair work on the unit after the foreclosure sale, an electric bill, and interest on the foreclosure sale purchase price. Plaintiff challenges the inclusion of these sums in the redemption price and the constitutionality of the procedure for determining the amount she needed to pay to redeem the property. Finding no error, we shall affirm the order.

FACTS

In 1977, plaintiff acquired a unit in a common interest development. Over the years, she leased the unit to others.[865]

Plaintiff failed to pay the monthly association fee. In June 2008, Associated Lien Services, the trustee under an October 2006 lien recorded by the homeowners association, issued a notice of trustee’s sale. According to the notice, “the unpaid balance of the obligation secured by the property,” plus costs, exceeded $10,000. Initially, the sale was scheduled for July 2008 but it was continued until June 17, 2009.

On the latter date, defendant purchased the unit at the foreclosure sale for $66,092.60. The sale was subject to plaintiff’s right of redemption.

At the time of the foreclosure sale the unit was vacant. In a declaration supporting her petition, plaintiff claimed her “last tenant made substantial improvements” and the property was “in a condition such that I could re-rent it” with only some “minimal cleaning . . . .”

After purchasing the unit at the foreclosure sale, defendant paid a locksmith $336.11 to change the locks. One of its employees claimed, “Upon entering the . . . property on 6/17/09, . . . [defendant] discovered the property in need of repair and rehabilitation.”

Between June 22 and July 2 defendant: (1) paid a pest control company $800 to repair termite damage to the unit; (2) hired a contractor to make repairs, paying $16,800 for the work; and (3) paid an electricity bill for $17.15.

In her declaration, plaintiff claimed that, on July 3, she had a locksmith replace the locks. She also asserted “[a]n inspection of [the] property was made at that time which disclosed . . . the work undertaken by [defendant] was not complete,” and the unit “could not be rented in the condition it was in.”

The trustee sent plaintiff a letter enclosing a schedule showing the balance due to redeem the unit was $29,548.71 after deducting nearly $57,900 then held in trust. The schedule included the sums mentioned above, plus two months homeowners’ association assessments, taxes, collection costs, and $770 for two months’ interest on defendant’s purchase price. Plaintiff objected to including the repair expenses, utility payment, and interest in the redemption price. She deposited $11,500 with the trustee and filed the current petition for a judicial determination of the amount owed.

After a hearing, the court issued an order declaring “the additional amount required to redeem the property total[ed] $18,148.71,” constituting the difference between plaintiff’s deposit and the balance claimed by the trustee. In part, the court found plaintiff “failed to meet her burden of proof to show that[866]the work performed was not for the reasonable maintenance, upkeep, and repair of improvements on the property.” Although not supported by the appellate record, plaintiff’s opening brief asserts she timely paid the additional sum due and redeemed the unit.

DISCUSSION

1. Introduction

Generally, there is no right of redemption in nonjudicial foreclosure proceedings. (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1236.) But this case involves the foreclosure of a unit in a common interest development that resulted from plaintiff’s failure to pay the homeowner association’s monthly assessment for maintenance and preservation of the development’s common areas. (Civ. Code, §§ 1367, subd. (a); 1367.1, subd. (g) [association may enforce lien for delinquent assessments through “sale by . . . trustee”].) Code of Civil Procedure section 729.035 declares, “Notwithstanding any provision of law to the contrary, the sale of a separate interest in a common interest development is subject to the right of redemption . . . if the sale arises from a foreclosure by the association of a common interest development pursuant to subdivision (g) of [s]ection 1367.1 of the Civil Code . . . .” (See also Civ. Code, § 1367.4, subd. (c)(4) [“A nonjudicial foreclosure by an association to collect upon a debt for delinquent assessments shall be subject to a right of redemption”].)

Code of Civil Procedure section 729.060, subdivision (a) requires “[a] person who seeks to redeem the property [to] deposit the redemption price with the levying officer who conducted the sale before the expiration of the redemption period.” Subdivision (b) of this statute defines the redemption price as “the total of the following amounts . . . . [¶] (1) The purchase price at the sale. [¶] (2) The amount of any assessments or taxes and reasonable amounts for fire insurance, maintenance, upkeep, and repair of improvements on the property. [¶] (3) Any amount paid by the purchaser on a prior obligation secured by the property to the extent that the payment was necessary for the protection of the purchaser’s interest. [¶] (4) Interest on the amounts described in paragraphs (1), (2), and (3) . . . .” In addition, subdivision (c) of Code of Civil Procedure section 729.060 authorizes an offset to the redeeming party for “[r]ents and profits from the property paid to the purchaser or the value of the use and occupation of the property to the purchaser . . . .”

[1] After the trustee notified plaintiff of the amount required to redeem the property, she challenged it by filing a petition under Code of Civil Procedure section 729.070. This statute creates a procedure allowing one[867]“seeking to redeem the property [who] disagree[s with] the redemption price” to petition “the court for an order determining the redemption price . . . .” (Code Civ. Proc., § 729.070, subd. (a).) The statute requires a hearing on the petition at which “the person seeking to redeem the property has the burden of proof.” (Code Civ. Proc., § 729.070, subds. (c), (e).) “At the conclusion of the hearing, the court shall determine by order the amount required to redeem the property” based “upon affidavit or evidence satisfactory to the court” and, “[i]f an amount in addition to that deposited with the levying officer is required to redeem the property, the person seeking to redeem shall” have “10 days after the issuance of the order[ to] pay the additional amount . . . .” (Code Civ. Proc., § 729.070, subds. (f), (g).)

The trial court ruled against plaintiff, finding she had not met her burden of proof to show the redemption price demanded by the trustee exceeded the legally permitted amount or that she entitled to an offset.

2. Due Process

Plaintiff attacks the constitutionality of the redemption procedure created by Code of Civil Procedure section 729.070. She claims defendant’s “conduct [in entering the unit] prevented [her] from describing the [property’s] condition” and therefore the statute “does not afford a meaningful hearing for [a] . . . homeowner to meet her[] burden of proof.”

[2] Both the United States Constitution and the California Constitution guarantee no one may be deprived of his or her property “‘without due process of law.'” (Morongo Band of Mission Indians v. State Water Resources Control Bd. (2009) 45 Cal.4th 731, 736.) In civil proceedings, this guarantee includes the right to have a matter decided by a tribunal having jurisdiction of the action that is free of bias and conducts a full hearing on the matter after the parties have been given notice of the proceeding and an opportunity to appear and participate in it. (7 Witkin, Summary of Cal. Law (10th ed. 2005) Constitutional Law, §§ 640-642, pp. 1041-1044; 2 Witkin, Cal. Proc. (5th ed. 2008) Jurisdiction, §§ 302-304, 307-308, pp. 914-916, 918-921.) “When the Constitution requires a hearing, it requires a fair one, one before a tribunal which meets established standards of procedure. . . . Procedure is the fair, orderly, and deliberate method by which matters are litigated. To judge in a contested proceeding implies the hearing of evidence from both sides in open court, a comparison of the merits of the evidence of each side, a conclusion from the evidence of where the truth lies, application of the appropriate laws to the facts found, and the rendition of a judgment accordingly.” (Estate of Buchman (1954) 123 Cal.App.2d 546, 560.)[868]

[3] Plaintiff’s argument is meritless. She does not claim the trustee failed to give her notice of her default or the impending nonjudicial foreclosure sale resulting from her failure to pay monthly homeowner assessments. After the foreclosure sale, she admittedly received an itemized notice of the amount needed to redeem the property. The procedure created by Code of Civil Procedure section 729.070 afforded her a means to challenge the amount demanded by the trustee with a noticed hearing before an unbiased judicial tribunal where she was allowed to present evidence and argument on the issue.

Plaintiff claims this procedure fails to “safeguard[] . . . the right to discovery” and she was not given a chance to document the condition of the premises before defendant entered and began making modifications to the unit. But she also acknowledged her last tenant vacated the premises before the foreclosure sale, thereby giving her possession of the premises to inspect and document the unit’s habitable condition. There is no explanation of why plaintiff could not have obtained a declaration from the former tenant or photographically documented the condition of the premises when the last tenancy ended.

[4] Nor did defendant engage in wrongdoing when it entered the unit. By statute, it had the right “from the time of sale until redemption . . . to enter the property during reasonable hours to repair and maintain the premises . . . .” (Code Civ. Proc., § 729.090, subd. (c).) Thus, we reject plaintiff’s denial of due process claim.

3. Defendant’s Right to Enter and Repair the Unit

Next, plaintiff repeats her argument defendant acted as a trespasser, claiming it failed to contact her before having a locksmith change the locks and then engage a contractor to perform work that prepared the property for sale.

Plaintiff acknowledges Code of Civil Procedure section 729.090, subdivision (c) authorizes the purchaser at a foreclosure sale to enter the property “to repair and maintain the premises . . . .” While this statute limits entry to “reasonable hours” (ibid.), nothing in the statute required defendant to notify plaintiff or seek her cooperation. In addition, when the foreclosure sale occurred the unit was admittedly vacant and plaintiff had not shown any interest in recovering the property.

After entry, defendant began rehabilitating the unit with the intention of reselling it. Contrary to plaintiff’s claim, this effort did not alter the unit’s intended use. For that reason, plaintiff’s reliance on Dwyer v. Carroll (1890)[869]86 Cal. 298 is unpersuasive. There a landlord reentered the leased premises, a building used as a hotel, purportedly to make needed repairs to the first floor. Instead, the landlord raised the building’s foundation several feet and added a cellar and a new floor, thereby requiring the plaintiff and his lodgers to vacate the premises. Here, the unit was vacant when defendant entered and the work performed by it was to make the unit habitable. Thus, whether occupied by a third-party purchaser or a tenant, in either case the unit would be employed for the same purpose, habitation.

4. The Sums Charged for the Unit’s Maintenance, Upkeep, and Repair

Next, plaintiff presents a series of arguments attacking the amount awarded to defendant for the work performed on the unit before she retook possession of it.

[5] One claim is that the trial court erred by not imposing the burden of proof to establish the reasonableness of the repair costs on defendant. Plaintiff cites several policy reasons why defendant should carry the proof burden. But, as she acknowledges, under Evidence Code section 500, “[e]xcept as otherwise provided by law, a party has the burden of proof as to each fact the existence or nonexistence of which is essential to the claim for relief or defense that he [or she] is asserting.” Here, Code of Civil Procedure section 729.070, subdivision (e) expressly provides “[a]t the hearing on the petition, the person seeking to redeem the property has the burden of proof.” Thus, by statute the Legislature has declared the party challenging a trustee’s stated redemption price carries the burden to establish the validity of its objections to the disputed amounts.

Plaintiff’s second claim concerns the license status of Axcell Construction, the contractor defendant hired to repair and rehabilitate the unit. In support of her petition, plaintiff submitted evidence Axcell’s license was suspended at the time it worked on the unit. She argues defendant “cannot pass on [to her] an unlawful obligation for payments made to the unlicensed contractor . . . .” We disagree with this interpretation of the applicable law.

[6] Business and Professions Code section 7031, subdivision (a) declares “no person engaged in the business or acting in the capacity of a contractor, may bring or maintain any action . . . for the collection of compensation for the performance of any act or contract where a license is required by this chapter without alleging that he or she was a duly licensed contractor at all times during the performance of that act or contract, regardless of the merits of the cause of action brought by the person . . . .” While “[g]enerally a contract made in violation of a regulatory statute is void” and “courts will not ‘”lend their aid to the enforcement of an illegal agreement or one against[870]public policy”‘” (Asdourian v. Araj (1985) 38 Cal.3d 276, 291), “‘the rule is not an inflexible one to be applied in its fullest rigor under any and all circumstances. A wide range of exceptions has been recognized.’ [Citation]” (ibid.).

[7] “It is not the law that every transaction connected with an illegal transaction is itself illegal. Each case must turn on its own facts. The purpose of the statute which has been violated must be considered. In that connection, the court should consider whether a holding that the collateral transaction is illegal will tend to assist or defeat the main purpose of the statute. . . . [¶] This principle is stated . . . as follows: ‘If refusal to enforce or to rescind an illegal bargain would produce a harmful effect on parties for whose protection the law making the bargain illegal exists, enforcement or rescission, whichever is appropriate, is allowed.'” (Robertson v. Hyde (1943) 58 Cal.App.2d 667, 672.)

[8] Cases have recognized “causes of action that do not seek ‘the collection of compensation for the performance of any act or contract for which a license is required’ are beyond the scope of Business and Professions Code section 7031.” (Holland v. Morse Diesel Internat., Inc. (2001) 86 Cal.App.4th 1443, 1451.) This case does not involve a collection action by Axcell for the cost of its work. Rather, defendant sought reimbursement from plaintiff for expenses it incurred to maintain and make repairs to the unit, including the amount it paid to Axcell. Thus, the sum claimed is in the nature of indemnification for one who paid by another who in justice should pay. (See Ranchwood Communities Limted Partnership v. Jim Beat Construction (1996) 49 Cal.App.4th 1397, 1421 [“total ban on . . . liability for equitable indemnity, arising from a too-strict interpretation of the licensing law, would be a windfall and would not be within the protective purpose of the licensing statute”].)

Finally, plaintiff claims defendant is barred from recovering the repair and maintenance expenses because it “was creating a new thing, i.e., rehabilitating a rental unit for sale.” This argument essentially amounts to an attack on the sufficiency of the evidence to support the trial court’s decision. “‘It is well established that a reviewing court starts with the presumption that the record contains evidence to sustain every finding of fact.’ [Citations.]” (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881.) Consequently, “‘[w]hen a finding of fact is attacked on the ground that there is not any substantial evidence to sustain it, the power of an appellate courtbeginsandendswith the determination as to whether there is any substantial evidence contradicted or uncontradicted which will support the finding of fact.’ [Citations.]” (Ibid.) The same rule applies “whether the[871]trial court’s ruling is based on oral testimony or declarations. [Citation.]” (Shamblin v. Brattain (1988) 44 Cal.3d 474, 479, fn. omitted.)

[9] As a general rule “the mortgagee may make such repairs as are reasonably necessary for the preservation of the property, but not permanent improvements, or things which conduced merely to his comfort or convenience. [Citations.]” (Raynor v. Drew (1887) 72 Cal. 307, 312.) “‘The ordinary rule in respect to improvements is that the mortgagee will not be allowed for them further than is proper to keep the premises in necessary repair. Unreasonable improvements may be of benefit to the estate; but, unless made with the consent and approbation of the mortgagor, no allowance can be made for them. The mortgagee has no right to impose them upon the owner, and thereby increase the burden of redeeming.’ [Citation.]” (Malone v. Roy (1895) 107 Cal. 518, 523.)

Defendant’s opposition to the petition included the declaration of Toby Strassenberg, one of its project managers. It stated he “personally evaluated the extent of damage” to the unit, concluding it was “in need of repair and rehabilitation.” In part, the repair work resulted from the discovery of substantial termite damage. He also claimed, the “repairs made were necessary to prevent further damage to the property . . . .”

Referring to her claim repairs “necessary to ‘maintain’ the property as a rental unit” are distinguishable from repairs rehabilitating the unit for the purpose of a resale, plaintiff claims “no conflict appeared in the evidence before the trial court.” While it may be true defendant made the repairs with the intent of reselling the unit, as discussed above, the distinction between one living in the unit as an owner and one living in it as a tenant, insofar as the right of redemption is concerned, amounts to a distinction without a difference.

Thus, plaintiff has failed to establish the trial court erred by awarding defendant the entire amount expended in the effort to repair and maintain the unit after acquiring it at the foreclosure sale.

5. Denial of Plaintiff’s Request for an Offset

Finally, noting the repair work begun by defendant “was not complete at the date of the hearing” on her petition and claiming “the amount to complete the work” would exceed the $770 in interest awarded to defendant as part of the redemption price, plaintiff argues awarding this amount to defendant would be inequitable.[872]

[10] Code of Civil Procedure section 729.060, subdivision (b)(1) and (4) expressly provides “[i]nterest on” “[t]he purchase price at the sale” constitutes an element of the redemption price. The statute allows an offset to one seeking to redeem the property only for “[r]ents and profits from the property paid to the purchaser or the value of the use and occupation of the property to the purchaser . . . .” (Code Civ. Proc., § 729.060, subd. (c).) As discussed above, defendant presented evidence supporting a finding substantial repairs were needed to make the inhabitable. Consequently, the unit was not available for occupation while it was being rehabilitated. In addition, defendant’s failure to complete the repair work resulted from plaintiff’s repossession of the unit while the work was in progress. Therefore, we reject plaintiff’s offset claim as well.

DISPOSITION

The order is affirmed. Respondent shall recover its costs on appeal.

O’Leary, J., and Moore, J., concurred.

FN *. Pursuant to Cal. Const., art. VI, § 21.

Code of Civil Procedure Section 729.060. Redemption Price.

(a) A person who seeks to redeem the property shall deposit the redemption price with the levying officer who conducted the sale before the expiration of the redemption period. If a successor in interest to the judgment debtor seeks to redeem the property, the successor in interest shall, at the time the redemption price is deposited, file with the levying officer either (1) a certified copy of a recorded conveyance or (2) a copy of an assignment or any other evidence of the interest verified by an affidavit of the successor in interest or of a subscribing witness thereto.

(b) The redemption price is the total of the following amounts, less any offset allowed under subdivision (c).

(1) The purchase price at the sale.

(2) The amount of any assessments or taxes and reasonable amounts for fire insurance, maintenance, upkeep, and repair of improvements on the property.

(3) Any amount paid by the purchaser on a prior obligation secured by the property to the extent that the payment was necessary for the protection of the purchaser’s interest.

(4) Interest on the amounts described in paragraphs (1), (2), and (3) at the rate of interest on money judgments from the time such amount was paid until the date the deposit is made.

(5) If the purchaser at the sale has any liens subordinate to the lien under which the property was sold, the amount of the purchaser’s lien, plus interest at the rate of interest on money judgments from the date of the sale until the date the deposit is made.

(c) Rents and profits from the property paid to the purchaser or the value of the use and occupation of the property to the purchaser may be offset against the amounts described in subdivision (b).

Code of Civil Procedure Section 729.030. Right of Redemption – Judicial Foreclosure.

The redemption period during which property may be redeemed from a foreclosure sale under this chapter ends:

(a) Three months after the date of sale if the proceeds of the sale are sufficient to satisfy the secured indebtedness with interest and costs of action and of sale.

(b) One year after the date of sale if the proceeds of the sale are not sufficient to satisfy the secured indebtedness with interest and costs of action and of sale.

Civil Code Section 2924f. Notice of Trustee Sale.

(a) As used in this section and Sections 2924g and 2924h, “property” means real property or a leasehold estate therein, and “calendar week” means Monday through Saturday, inclusive.

(b)

(1) Except as provided in subdivision (c), before any sale of property can be made under the power of sale contained in any deed of trust or mortgage, or any resale resulting from a rescission for a failure of consideration pursuant to subdivision (c) of Section 2924h, notice of the sale thereof shall be given by posting a written notice of the time of sale and of the street address and the specific place at the street address where the sale will be held, and describing the property to be sold, at least 20 days before the date of sale in one public place in the city where the property is to be sold, if the property is to be sold in a city, or, if not, then in one public place in the judicial district in which the property is to be sold, and publishing a copy once a week for three consecutive calendar weeks.

(2) The first publication to be at least 20 days before the date of sale, in a newspaper of general circulation published in the city in which the property or some part thereof is situated, if any part thereof is situated in a city, if not, then in a newspaper of general circulation published in the judicial district in which the property or some part thereof is situated, or in case no newspaper of general circulation is published in the city or judicial district, as the case may be, in a newspaper of general circulation published in the county in which the property or some part thereof is situated, or in case no newspaper of general circulation is published in the city or judicial district or county, as the case may be, in a newspaper of general circulation published in the county in this state that is contiguous to the county in which the property or some part thereof is situated and has, by comparison with all similarly contiguous counties, the highest population based upon total county population as determined by the most recent federal decennial census published by the Bureau of the Census.

(3) A copy of the notice of sale shall also be posted in a conspicuous place on the property to be sold at least 20 days before the date of sale, where possible and where not restricted for any reason. If the property is a single-family residence the posting shall be on a door of the residence, but, if not possible or restricted, then the notice shall be posted in a conspicuous place on the property; however, if access is denied because a common entrance to the property is restricted by a guard gate or similar impediment, the property may be posted at that guard gate or similar impediment to any development community.

(4) The notice of sale shall conform to the minimum requirements of Section 6043 of the Government Code and be recorded with the county recorder of the county in which the property or some part thereof is situated at least 20 days prior to the date of sale.

(5) The notice of sale shall contain the name, street address in this state, which may reflect an agent of the trustee, and either a toll-free telephone number or telephone number in this state of the trustee, and the name of the original trustor, and also shall contain the statement required by paragraph (3) of subdivision (c). In addition to any other description of the property, the notice shall describe the property by giving its street address, if any, or other common designation, if any, and a county assessor’s parcel number; but if the property has no street address or other common designation, the notice shall contain a legal description of the property, the name and address of the beneficiary at whose request the sale is to be conducted, and a statement that directions may be obtained pursuant to a written request submitted to the beneficiary within 10 days from the first publication of the notice. Directions shall be deemed reasonably sufficient to locate the property if information as to the location of the property is given by reference to the direction and approximate distance from the nearest crossroads, frontage road, or access road. If a legal description or a county assessor’s parcel number and either a street address or another common designation of the property is given, the validity of the notice and the validity of the sale shall not be affected by the fact that the street address, other common designation, name and address of the beneficiary, or the directions obtained therefrom are erroneous or that the street address, other common designation, name and address of the beneficiary, or directions obtained therefrom are omitted.

(6) The term “newspaper of general circulation,” as used in this section, has the same meaning as defined in Article 1 (commencing with Section 6000) of Chapter 1 of Division 7 of Title 1 of the Government Code.

(7) The notice of sale shall contain a statement of the total amount of the unpaid balance of the obligation secured by the property to be sold and reasonably estimated costs, expenses, advances at the time of the initial publication of the notice of sale, and, if republished pursuant to a cancellation of a cash equivalent pursuant to subdivision (d) of Section 2924h, a reference of that fact; provided, that the trustee shall incur no liability for any good faith error in stating the proper amount, including any amount provided in good faith by or on behalf of the beneficiary. An inaccurate statement of this amount shall not affect the validity of any sale to a bona fide purchaser for value, nor shall the failure to post the notice of sale on a door as provided by this subdivision affect the validity of any sale to a bona fide purchaser for value.

(8)

(A) On and after April 1, 2012, if the deed of trust or mortgage containing a power of sale is secured by real property containing from one to four single-family residences, the notice of sale shall contain substantially the following language, in addition to the language required pursuant to paragraphs (1) to (7), inclusive:

NOTICE TO POTENTIAL BIDDERS: If you are considering bidding on this property lien, you should understand that there are risks involved in bidding at a trustee auction. You will be bidding on a lien, not on the property itself. Placing the highest bid at a trustee auction does not automatically entitle you to free and clear ownership of the property. You should also be aware that the lien being auctioned off may be a junior lien. If you are the highest bidder at the auction, you are or may be responsible for paying off all liens senior to the lien being auctioned off, before you can receive clear title to the property. You are encouraged to investigate the existence, priority, and size of outstanding liens that may exist on this property by contacting the county recorder’s office or a title insurance company, either of which may charge you a fee for this information. If you consult either of these resources, you should be aware that the same lender may hold more than one mortgage or deed of trust on the property.

NOTICE TO PROPERTY OWNER: The sale date shown on this notice of sale may be postponed one or more times by the mortgagee, beneficiary, trustee, or a court, pursuant to Section 2924g of the California Civil Code. The law requires that information about trustee sale postponements be made available to you and to the public, as a courtesy to those not present at the sale. If you wish to learn whether your sale date has been postponed, and, if applicable, the rescheduled time and date for the sale of this property, you may call [telephone number for information regarding the trustee’s sale] or visit this Internet Web site [Internet Web site address for information regarding the sale of this property], using the file number assigned to this case [case file number]. Information about postponements that are very short in duration or that occur close in time to the scheduled sale may not immediately be reflected in the telephone information or on the Internet Web site. The best way to verify postponement information is to attend the scheduled sale.

(B) A mortgagee, beneficiary, trustee, or authorized agent shall make a good faith effort to provide up-to-date information regarding sale dates and postponements to persons who wish this information. This information shall be made available free of charge. It may be made available via an Internet Web site, a telephone recording that is accessible 24 hours a day, seven days a week, or through any other means that allows 24 hours a day, seven days a week, no-cost access to updated information. A disruption of any of these methods of providing sale date and postponement information to allow for reasonable maintenance or due to a service outage shall not be deemed to be a violation of the good faith standard.

(C) Except as provided in subparagraph (B), nothing in the wording of the notices required by subparagraph (A) is intended to modify or create any substantive rights or obligations for any person providing, or specified in, either of the required notices. Failure to comply with subparagraph (A) or (B) shall not invalidate any sale that would otherwise be valid under Section 2924f.

(D) Information provided pursuant to subparagraph (A) does not constitute the public declaration required by subdivision (d) of Section 2924g.

(9) If the sale of the property is to be a unified sale as provided in subparagraph (B) of paragraph (1) of subdivision (a) of Section 9604 of the Commercial Code, the notice of sale shall also contain a description of the personal property or fixtures to be sold. In the case where it is contemplated that all of the personal property or fixtures are to be sold, the description in the notice of the personal property or fixtures shall be sufficient if it is the same as the description of the personal property or fixtures contained in the agreement creating the security interest in or encumbrance on the personal property or fixtures or the filed financing statement relating to the personal property or fixtures. In all other cases, the description in the notice shall be sufficient if it would be a sufficient description of the personal property or fixtures under Section 9108 of the Commercial Code. Inclusion of a reference to or a description of personal property or fixtures in a notice of sale hereunder shall not constitute an election by the secured party to conduct a unified sale pursuant to subparagraph (B) of paragraph (1) of subdivision (a) of Section 9604 of the Commercial Code, shall not obligate the secured party to conduct a unified sale pursuant to subparagraph (B) of paragraph (1) of subdivision (a) of Section 9604 of the Commercial Code, and in no way shall render defective or noncomplying either that notice or a sale pursuant to that notice by reason of the fact that the sale includes none or less than all of the personal property or fixtures referred to or described in the notice. This paragraph shall not otherwise affect the obligations or duties of a secured party under the Commercial Code.

(c)

(1) This subdivision applies only to deeds of trust or mortgages which contain a power of sale and which are secured by real property containing a single-family, owner-occupied residence, where the obligation secured by the deed of trust or mortgage is contained in a contract for goods or services subject to the provisions of the Unruh Act (Chapter 1 (commencing with Section 1801) of Title 2 of Part 4 of Division 3).

(2) Except as otherwise expressly set forth in this subdivision, all other provisions of law relating to the exercise of a power of sale shall govern the exercise of a power of sale contained in a deed of trust or mortgage described in paragraph (1).

(3) If any default of the obligation secured by a deed of trust or mortgage described in paragraph (1) has not been cured within 30 days after the recordation of the notice of default, the trustee or mortgagee shall mail to the trustor or mortgagor, at his or her last known address, a copy of the following statement:

YOU ARE IN DEFAULT UNDER A

_______________________________________________,

(Deed of trust or mortgage)

DATED ____. UNLESS YOU TAKE ACTION TO PROTECT

YOUR PROPERTY, IT MAY BE SOLD AT A PUBLIC SALE.

IF YOU NEED AN EXPLANATION OF THE NATURE OF THE

PROCEEDING AGAINST YOU, YOU SHOULD CONTACT A

LAWYER.

(4) All sales of real property pursuant to a power of sale contained in any deed of trust or mortgage described in paragraph (1) shall be held in the county where the residence is located and shall be made to the person making the highest offer. The trustee may receive offers during the 10-day period immediately prior to the date of sale and if any offer is accepted in writing by both the trustor or mortgagor and the beneficiary or mortgagee prior to the time set for sale, the sale shall be postponed to a date certain and prior to which the property may be conveyed by the trustor to the person making the offer according to its terms. The offer is revocable until accepted. The performance of the offer, following acceptance, according to its terms, by a conveyance of the property to the offeror, shall operate to terminate any further proceeding under the notice of sale and it shall be deemed revoked.

(5) In addition to the trustee fee pursuant to Section 2924c, the trustee or mortgagee pursuant to a deed of trust or mortgage subject to this subdivision shall be entitled to charge an additional fee of fifty dollars ($50).

(6) This subdivision applies only to property on which notices of default were filed on or after the effective date of this subdivision.

(d) With respect to residential real property containing no more than four dwelling units, a separate document containing a summary of the notice of sale information in English and the languages described in Section 1632 shall be attached to the notice of sale provided to the mortgagor or trustor pursuant to Section 2923.3.